Fierce competition among credit providers has resulted in tumbling personal loan rates and lengthier interest-free credit card offers.
But there’s a catch. To be accepted for these ever-keener deals on borrowing, you’ll need an excellent credit score.
If you don’t know the shape your credit score is in and your application is rejected, you can damage it even further. That’s why it pays to know about Smart Search – a nifty tool which is completely free to use and keeps your credit score intact.
Here we explain what Smart Search is, how to use it – and set out the raft of ever-improving deals it could help you get your hands on.
First off, what’s been happening on borrowing?
Personal loan rates are continuing to drop, and you can now enjoy rates just above the 3% APR representative mark on borrowing between £7,500 and £15,000.
For smaller borrowing, say between £1,000 and £2,000, a 0% purchase credit card should do the trick as you won’t be charged interest during the promotional period. And the top deals at the moment offer interest-free purchases for more than two years.
If you have existing card debt that you want to shift, you’ll need a 0% balance transfer credit card – and terms have improved on these too. They now offer up to three years or more to clear your debt before interest kicks in, while transfer fees have been coming down.
Just be sure to clear your balance before the 0% window ends.
If you don’t know the shape your credit score is in and your application is rejected, you can damage it even further
Will you get accepted?
There’s nothing to stop you applying for great deals like these – but the reality is, only 51% of successful applicants need to qualify for the rates in order for providers to advertise them. That means an awful lot of people are turned down.
Using the MoneySuperMarket Smart Search tool will tell you how likely you are to be accepted for a form of credit without leaving a mark on your credit file. How Smart Search works will depend on whether you are applying for a loan or a credit card. If you’re applying for a loan follow these steps:
-From the loans homepage, click on the green ‘Find a loan’ button
-Enter details such as how much you need to borrow, how long you want to borrow it and your annual income – this will take less than two minutes
-This will trigger the credit reference agency Experian to carry out a ‘soft search’ of your credit score. BUT unlike a regular search, it won’t be visible to lenders. In fact, only you will be able to see it on your credit file
-A list of loans will spring up in a matter of seconds and tell you how likely you are to be accepted for each. Likelihood is expressed as a simple percentage on a dial and is colour-coded red, amber and green
-Results will be ordered by eligibility, so those closest to 100% (furthest into the ‘green’) will be at the top. If you prefer, you can re-order them from the lowest to highest APR
-The rest is up to you. You might decide to go for the loan with the highest chance of acceptance (90% for example), instead of a cheaper loan that you’ve a lower chance of being accepted for (say, 50%)
If you’re applying for a credit card:
-From our credit card homepage, click on the ‘Find a card’ button on our comparison tables
-Enter details such as your name, your annual income and the name of your main bank
-A list of credit cards will spring up and tell you how likely you are to be accepted for each. This is expressed as a score out of 10 and is colour-coded red, amber and green
-Results will be ordered by eligibility, so those closest to 10 will be at the top. But, if you prefer, you can change this to the longest 0% deal, for example
-Again, you can use this information to assess the benefits of the credit card versus your chances of getting it
A final word…
Smart Search is a really useful tool – but it’s only an indication of acceptance and NOT a steadfast guarantee.
We’re working hard on it, not all providers have agreed to take part in Smart Search yet. This means the list returned to you won’t feature the whole market.
But, so long as you keep this in mind, Smart Search could still help you to find the right loan or credit card, without damaging your credit score.